EASTERN DIVISION

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FEDERAL TRADE COMMISSION, )

Plaintiff, )

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v. ) Civil Action No 98 C 0170

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)

JACQUELINE SABAL, ) Judge George W. Lindberg

a.k.a. JACQUELINE SABLE ) Magistrate Ronald A. Guzman

individually, )

Defendant. )

____________________________________)

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), has filed a complaint for a permanent injunction and other equitable relief in this matter, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b), charging defendant Jacqueline Sabal with violations of Sections 5 and 12 of the FTC Act, 15 U.S.C. §§  45 and 52. The Commission, by and through its counsel, and defendant Jacqueline Sabal have agreed to the entry of this Stipulated Order for Permanent Injunction and Final Judgment by this Court in order to resolve all matters of dispute between them in this action without trial or adjudication of any issue of law or fact herein.

NOW, THEREFORE, defendant Jacqueline Sabal and the Commission have requested the Court to enter this Stipulated Order for Permanent Injunction and Final Judgment. It is therefore ORDERED, ADJUDGED AND DECREED as follows:

1. This Court has jurisdiction over the subject matter of this case and all parties hereto.

2. The Complaint states a claim upon which relief may be granted against defendant Jacqueline Sabal under Sections 5, 12, and 13(b) of the FTC Act, 15 U.S.C. §§ 45, 52, and 53(b).

3. On January 12, 1998, plaintiff filed its Complaint for a permanent injunction and other equitable relief in this matter, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).

4. On July 20, 1998, this Court entered an order granting the FTC's Motion for a Preliminary Injunction Order and Asset Freeze against defendant Jacqueline Sable.

5. Defendant Jacqueline Sabal has waived all claims under the Equal Access to Justice Act, 28 U.S.C. § 2412, and all rights to seek judicial review or otherwise to challenge the validity of this Stipulated Order for Permanent Injunction and Final Judgment.

6. Entry of this Order is in the public interest.

7. This Stipulated Order for Permanent Injunction and Final Judgment does not constitute and shall not be interpreted to constitute either an admission by the defendant or a finding by the Court that defendant has engaged in violations of the FTC Act.

For purposes of this Stipulated Order for Permanent Injunction and Final Judgment, the following definitions shall apply:

1. "Defendant" means Jacqueline Sabal, individually, and her successors and assigns, officers, directors, agents, representatives, employees, and those persons in active concert with her, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any entity, corporation, subsidiary, division, or other device.

2. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

3. "Franchise" and "Franchisee" are defined in Section 436.2(a) of the Federal Trade Commission Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" ( the "Franchise Rule" or "Rule").

4. "Business opportunity" or "Business venture" means any written or oral business arrangement, however denominated, whether or not covered by the Franchise Rule, which consists of the payment of any consideration for: (a) the right or means to offer, sell, or distribute goods or services (whether or not identified by a trademark, service mark, trade name, advertising, or other commercial symbol); and (b) more than nominal assistance to any person or entity in connection with, or incident to, the establishment, maintenance, or operation of a new business or the entry by an existing business into a new line or type of business.

IT IS THEREFORE ORDERED that defendant, Jacqueline Sabal, directly or through any corporation, subsidiary, division, or other device, is hereby permanently restrained and enjoined from engaging or participating in the manufacturing, labeling, advertising, promoting, marketing, offering for sale, sale or distribution of any product or service which she, or any person or entity acting in concert or participation with her, claims will result in hair growth anywhere on the body, hair loss prevention, or the treatment or prevention of baldness.

IT IS FURTHER ORDERED that defendant, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promoting, marketing, offering for sale, sale, or distribution of Sable Hair Farming System or Hair Farming, or any product that is substantially similar in ingredients, composition and properties, is hereby permanently restrained and enjoined from representing, in any manner, expressly or by implication, that:

A. Such product will stop, prevent, cure, relieve, reverse or reduce hair loss;

B. Such product will promote the growth of hair anywhere on the body;

C. Such product will promote the growth of hair anywhere on the body where hair has already been lost;

D. Such product is superior to Rogaine and Minoxidil in stopping, preventing, curing, relieving, reversing or reducing hair loss;

unless, at the time the representation is made, defendant possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

IT IS FURTHER ORDERED that defendant, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promoting, marketing, offering for sale, sale, or distribution of any product or service, is hereby permanently restrained and enjoined from:

A. Misrepresenting, directly or by implication, or failing to disclose any fact material to a consumer's decision to purchase or use said product or service;

B. Misrepresenting, directly or by implication, the existence, contents, validity, results, conclusions or interpretations of any test, study, or research;

C. Misrepresenting, directly or by implication, the benefits, performance, or efficacy of any product or service;

D. Misrepresenting, directly or by implication, that the experience of any purchaser represented in a testimonial or endorsement represents the typical or ordinary experience of consumers unless:

1. The representation is true, and at the time it is made, defendant possesses and relies upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates the representation;

2. Defendant discloses, clearly and prominently, and in close proximity to the endorsement or testimonial, either:

a. What the generally expected results would be for users of the product or service; or

b. The limited applicability of the endorser's experience to what consumers may generally expect to achieve, that is, that consumers should not expect to experience similar results.

Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label. For purposes of this Part, "endorsement" shall mean as defined in 16 C.F.R. § 255.0(b), a copy of which is attached hereto as Attachment 1;

E. Making any representation, expressly or by implication, that does not comply with any applicable rule or regulation established by the Food and Drug Administration;

F. Violating any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, a copy of which is attached hereto as Attachment 2; and

G. Conducting or participating in any telemarketing solicitation without compliance with all applicable federal and state registration and bond requirements.

IT IS FURTHER ORDERED that defendant, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, proposed sale, or sale of any franchise or business venture, or the entering into any contract or any other arrangement relating to the advertising, marketing, proposed sale or sale of any franchise or business venture, is hereby permanently restrained and enjoined from:

A. Making or assisting in the making of, expressly or by implication, any statement or representation of material fact, orally or in writing, that is false or misleading, including, but not limited to the following:

1. The income, profits, or sales volume capable of being achieved by franchise or business venture purchasers;

2. The income, profits, or sales volume achieved by other franchise or business venture purchasers;

3. The risk, liquidity, market value, resale value, or expected income or profit of any product or service sold in connection with any business opportunity;

B. Violating or assisting others to violate any provision of the Commission's Franchise Rule, 16 C.F.R. Part 436, a copy of which is attached hereto as Attachment 3 and incorporated by reference, including, but not limited to:

1. Failing to provide potential franchisees with a complete and accurate disclosure document in the manner and within the time frame required by the Rule, 16 C.F.R. § 436.1(a);

2. Failing to provide potential franchisees with an earnings claim document when any earnings claim is made, as required by the Rule, 16 C.F.R. § 436.1(b) - (e);

3. Failing to disclose, in immediate conjunction with any mass advertised earnings claim, the material basis for the claim (or lack of such basis) and a warning that the earnings claim is only an estimate, as required by the Rule, 16 C.F.R. § 436.1(e)(3) - (4).

IT IS FURTHER ORDERED that within ten (10) business days after the date of entry of this Stipulated Order by the Court defendant Jacqueline Sabal shall submit to the Commission a truthful sworn statement in the form shown on Attachment 4 of this Stipulated Order that shall reaffirm and attest to the truthfulness, accuracy and completeness of the financial statement signed by the defendant on August 22, 1998. The Commission's agreement to this Stipulated Order is expressly premised upon the financial condition of defendant Jacqueline Sable as represented in the financial statement referenced above, which contain material information upon which the Commission relied in negotiating and agreeing upon this Stipulated Order for Permanent Injunction and Final Judgment. If, upon motion by the Commission, this Court finds that defendant Jacqueline Sable failed to file the sworn statement required by this section, or filed a statement that failed to disclose any material asset, or materially misrepresented the value of any asset, or made any other material misrepresentation in or omission from her financial statement, the Commission may request that the judgment herein be reopened for the purpose of requiring monetary consumer redress or obtaining other equitable relief; provided, however, that in all other respects this judgment shall remain in full force and effect, unless otherwise ordered by this Court; and provided further, that proceedings instituted under this section are in addition to and not in lieu of any other civil or criminal remedies as may be provided by law, including, but not limited to, contempt proceedings, or any other proceedings the Commission may initiate to enforce this Stipulated Order for Permanent Injunction and Final Judgment.

IT IS FURTHER ORDERED that, within ten (10) business days after receipt by defendant of this Order as entered by the Court, defendant shall submit to the Commission a truthful sworn statement, in the form shown on Attachment 5, that shall acknowledge receipt of this Final Order.

IT IS FURTHER ORDERED that defendant, her successors and assigns, shall immediately upon entry of this Order, and for a period of five (5) years from the date of the entry of this Order:

A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of this Order from, each of her current and future officers, directors, agents, representatives, servants, employees, salespersons, independent contractors, and telemarketers who are engaged in the manufacturing, labeling, advertising, promotion, marketing, offering for sale, sale or distribution of any food, drug, or cosmetic as "food," "drug," and "cosmetic" are defined in Section 15 of the Federal Trade Commission Act, 15 U.S. C. § 55, or any dietary supplement, or any franchise or business opportunity;

B. Maintain, and upon reasonable notice make available to representatives of the Commission, the original and dated acknowledgments of receipts of copies of this Order required by Paragraph A above, and a list identifying the names, addresses, and telephone numbers of the persons or entities served with a copy of this Order.

IT IS FURTHER ORDERED that defendant, and her officers, agents, directors, servants, employees, salespersons, independent contractors, attorneys, corporations, subsidiaries, affiliates, successors, assigns, all other persons or entities directly or indirectly under her control or under common control with her, and all other persons in active concert or participation with her, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, are hereby enjoined from:

A. Failing to make and keep books, records, accounts, bank statements, current accountants' reports, general ledgers, general journals, cash receipt ledgers and source documents, documents indicating title to real or personal property, and any other data which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of defendant; and

B. Destroying, secreting, erasing, mutilating, concealing, defacing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any books, records, tapes, discs, accounting data, checks (fronts and backs), correspondence, forms, advertisements, brochures, manuals, electronically stored data, banking records, customer lists, customer files, invoices, telephone records, ledgers, payroll records, or other documents of any kind, including information stored in computer-maintained form (such as electronic mail), in their possession, custody or control.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, defendant, her successors and assigns, agents, employees, officers, and servants, corporations, and those persons in active concert or participation with her, who receive actual notice of this Order by personal service or otherwise, in connection with any business where defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where the business engages in the manufacturing, labeling, advertising, promoting, marketing, offering for sale, sale, or distribution of any food, drug, or cosmetic, as defined by Section 15 of the Federal Trade Commission Act, 15 U.S.C. § 55, or any dietary supplement, or any franchise or business opportunity, is hereby permanently restrained and enjoined from failing to create, and from failing to retain for a period of three (3) years following the date of such creation, unless otherwise specified:

A. Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;

B. Records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable. The businesses subject to this Paragraph shall retain such records for any terminated employee for a period of two (2) years following the date of termination;

C. Records containing the names, addresses, phone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased, for all consumers to whom such business has sold, invoiced or shipped any goods or services;

D. Records that reflect, for every consumer complaint or refund request, whether received directly or indirectly or through any third party:

1. The consumer's name, address, telephone number and the dollar amount paid by the consumer;

2. The written complaint or refund request, if any, and the date of the complaint or refund request;

3. The basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted concerning any complaint;

4. Each response and the date of response;

5. Any final resolution and the date of the resolution;

6. In the event of a denial of a refund request, the reason for the denial;

E. Copies of all sales scripts, training materials, advertisements, or other marketing materials utilized; provided that copies of all sales scripts, training materials, advertisements, or other marketing materials utilized shall be retained for three (3) years after the last date of dissemination of any such materials;

F. Copies of all materials relied upon in disseminating any representations covered by this Order, and all tests, reports, studies, surveys, demonstrations, or other evidence in defendant's possession and control that contradict, qualify, or call into question the representations made, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations shall be retained for five (5) years after the last date of dissemination of any such representation.

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this permanent injunction may be monitored:

A. For a period of five (5) years from the date of entry of this Order, defendant shall notify the Commission of the following:

1. Any changes in defendant's residence, mailing address, and telephone number, within ten (10) days of the date of such change;

2. Any changes in defendant's employment status (including self-employment) within ten (10) days of such change. Such notice shall include the name and address of each business that defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of defendant's duties and responsibilities in connection with the business or employment;

3. Any proposed change in the structure of any business entity owned or controlled by defendant, such as creation, incorporation, dissolution, assignment, sale, merger, dissolution of subsidiaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or any other change that may affect compliance obligations arising out of this Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the corporation about which defendant learns less than thirty (30) days prior to the date such action is to take place, defendant shall notify the Commission as soon as is practicable after learning of such proposed change;

B. One hundred eighty (180) days after the date of entry of this Order, defendant shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which the defendant has complied and is complying with this Order. This report shall include but not be limited to:

1. Defendant's then current residence address and telephone number;

2. Defendant's then current employment, business address and telephone numbers, a description of the business activities of each such employer, and defendant's title and responsibilities for each employer;

3. A copy of each acknowledgment of receipt of this Order obtained by defendant pursuant to Paragraph VII;

4. A statement describing the manner in which defendant has complied and is complying with the terms of this Order;

C. Upon written request by a representative of the Commission, defendant shall submit additional written reports, sworn to under penalty of perjury, and produce documents on fifteen (15) days notice with respect to any conduct subject to this Order;

D. For the purposes of this Order, defendant shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications and reports to the Commission to:

E. For the purposes of this Paragraph, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom defendant performs services as an employee, consultant, or independent contractor;

F. For purposes of the compliance reporting required by this Paragraph, the Commission is authorized to communicate directly with defendant.

IT IS FURTHER ORDERED that the Commission is authorized to monitor defendant Jacqueline Sabal's compliance with this Order by all lawful means, including but not limited to the following means:

A. The Commission is authorized, without further leave of court, to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26-37, including the use of compulsory process pursuant Rule 45 of the Federal Rules of Civil Procedure, for the purpose of monitoring and investigating defendant's compliance with any provision of this Order;

B. The Commission is authorized to use representatives posing as consumers and suppliers to defendant, defendant's employees, or any other entity managed or controlled in whole or in part by defendant, without the necessity of identification or prior notice;

C. Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. § § 49, and 57b-1, to investigate whether defendant has violated any provision of this Order or Section 5 of the FTC Act, 15 U.S.C. § 45.

IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, for the purpose of further determining compliance with this Order defendant shall permit representatives of the Commission, within three (3) business days of receipt of written notice from the Commission:

A. Access during normal business hours to any office, or facility storing documents, of any business where;

1. Defendant is the majority owner of the business or directly or indirectly manages or controls the business, and where;

2. The business is engaged in the manufacturing, labeling, advertising, promoting, marketing, offering for sale, or sale of any food, drug, or cosmetic as defined by Section 15 of the Federal Trade Commission Act, 15 U.S.C. § 55, or any dietary supplement, or any franchise or business opportunity;

In providing such access defendant shall permit representatives of the Commission to inspect and copy all documents relevant to any matter contained in this Order; and shall permit Commission representatives to remove documents relevant to any matter contained in this Order for a period not to exceed ten (10) business days so that the documents may be inspected, inventoried, and copied;

B. To interview the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Subsection A of this Paragraph applies, concerning matters relating to compliance with the terms of this Order. The person interviewed may have counsel present.

Provided that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to defendant's business premises for the purposes of inspecting and copying all documents relevant to any matter contained in this Order.

IT IS FURTHER ORDERED that, pursuant to Section 604 of the Fair Credit Reporting Act, 15 U.S.C. § 1681(b), any consumer reporting agency may furnish a consumer or credit report concerning defendant to plaintiff.

IT IS FURTHER ORDERED that the freeze of the assets of defendant Jacqueline Sabal obtained by the Commission, in any bank account or savings and loan institution, wherever located, shall be lifted upon the entry of this Order by the Court.

IT IS FURTHER ORDERED that each party shall bear its own costs and attorney's fees.

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for the purpose of enabling the parties to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Judgment, for the enforcement or compliance therewith, or the punishment of violations thereof.

The parties agree and stipulate to entry of the foregoing Order for Permanent Injunction

and Final Judgment.

For the FEDERAL TRADE COMMISSION DEFENDANT

_______________________________ ___________________________________

THERESA M. McGREW JACQUELINE SABAL

RUSSELL W. DAMTOFT (a.k.a. JACQUELINE SABLE)

Attorneys for Plaintiff

Federal Trade Commission

55 East Monroe, Suite 1860 ___________________________________

Chicago, IL 60603 STUART W. OPDYCKE

(312) 960-5634 Attorney for Defendant

53 West Jackson, Suite 224

Chicago, IL 60604

(312) 986-0898

SO ORDERED, this _____day of _______________________, 1998, at ______.

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United States District Judge